Addressing the scale-up problem in corporate innovation management

dual-innovation.net’s mission is to help companies solving their Corporate Innovation Problem™ which means that the Return On Innovation is too low.

As we have outlined HERE, we see three root causes for the Corporate Innovation Problem (for easier readability, we skip the ™-sign in the rest of the article):

The complexity problem – Conducting innovation in a globally dispersed set of innovation hubs, serving global markets as well as local ones, with all the difficulties coming from different cultures and information sharing in the light of exponential growth in technology bases and Digital coming on top

The systems problem – Improving the overall innovation capabilities of the companies in the light of a ‘fabric’ of soft and hard factors (strategy, governance, KPIs, culture, innovation networks, etc.) that in many cases is not perefectly aligned. Building on research initially conducted by the MIT we have developed our ENGAGE model (see HERE) to help our clients.

The integration problem – Making sure that strong innovation concepts based on meaningful insights and original ideas which satisfy customer desirability, technical feasibility and commercial viability are properly ‘docked’ to the ‘mothership’, i.e. the formal organization.

We have started to work on the integration problem.

The original pain point – Welcome, ambidexterity

More than three years ago, dual-innovation.net’s Frank Mattes and Dr. Ralph-Christian Ohr noticed a pain point in corporate innovation: How should companies balance the different requirements in searching for tomorrow’s business and in running today’s business? They wrote A WELL-RECEIVED ARTICLE urging the need for organizational ambidexterity, i.e implementing dual corporate innovation structures.

Frank’s and Ralph’s main arguments have been proven in practice.

Some shining examples like e.g. Amazon’s Cloud Computing business or Daimler’s Car2Go showed that scalable business models can grow out of appropriate ambidextrous structures.

Also on a broad scale, organizational ambidexterity has become mainstream. By now, one finds more than 300 corporate innovation centers around the world, widely pursuing explorative innovation via approaches such as incubators, accelerators, innovation labs, hackathons etc. And many companies are also increasingly using Corporate Venture Capital to drive explorative innovation (see exhibit below).

Companies use different tools to drive explorative innovation (Source: BCG)

Furthermore, a recent survey of German corporate innovators found that 100% (!) of them see an ambidextrous strategy to be vital for staying in the game. Even more so when “Digital” becomes part of the game.

The next pain point is emerging

Working with our clients to get dual structures to pay off, we clearly see a new pain point emerging: Companies are struggling to scale up their corporate start-ups / corporate ventures into impactful businesses.

In this context it is remarkable that the first of these ambitious innovation centers are being closed. Yes, these are singular examples by now. But on a broad scale, dissatisfaction with the ‘Return on Exploration’ seems to be growing.

Innovation theater and the missing integration

“Every CEO these days needs his innovation center. And of course, the C-suite has to see Silicon Valley. But where is the impact of this ‘innovation theater’?”, some people are already asking.

We do not see the real problem to be that too few managers have been exposed to Silicon Valley – There has almost been an ‘innovation tourism industry’ emerging over the last years.

We do not think that the root cause is a missing methodological foundation for conducting work in explorative units and the incubated corporate startups herein. On the contrary: Teams are working with Design Thinking, Lean Start-up, Business Model Canvasses or by applying agile development techniques.

We also do not see – in many cases – the root cause to be that these explorative units have not been set up properly for success. Necessary – while not sufficient – factors of success have been identified.

We observe more and more that the key problem is somewhere else: In order to get from exploration to impact, inherent tensions along the scaling process need to be managed well. In particular, the tensions in integrating the ‘innovation speed boats’ with the ‘mothership’.

So far, there seems no comprehensive approach for what it takes to successfully cope with this critical innovation phase.

Open call to practitioners: Let’s work on how to get from corporate start-up to impact

We have started working on this approach and developed the first outlines of a solid framework: Some sort of scaling methodology containing guidelines on what to consider in which circumstances to improve the chances for successful scaling.

We feel that we are only a few steps away from an actionable concept – a “Minimum Viable Product” if you will. We therefore invite all innovation practitioners to join forces and to work on this.

About dual-innovation.net

dual-innovation.net is an international agency focused on solving the ‘Corporate Innovation Problem™’. To achieve this, we provide consulting services based on proven, best-in-class methodology which in many cases is proprietary. The services are delivered by experienced innovation management specialists and by subject-matter experts.

Please get in touch with us if you want to improve the outcomes of innovation investments.